Bhutan & Singapore: Advancing Carbon Market Innovation through Partnership

Asia’s rise as a global carbon trading hub is grounded in its strong financial infrastructure, forward-looking regulatory environment, and commitment to environmental innovation. As a regional and international hub, Singapore attracts governments, investors, project developers, and environmental organizations looking to scale credible carbon credit solutions. Facilitating transparent and high-integrity carbon pricing and trading systems can contribute significantly to reducing emissions across Asia and beyond.

The World Bank recognizes the catalytic role of carbon markets as a tool in the global response to climate change. The Bank emphasizes the need for regional collaboration—including in Asia’s emerging economies—to accelerate low-carbon economic development.

Enabling access to carbon markets

On February 28, 2025, the Government of Singapore and the Royal Government of Bhutan signed an Implementation Agreement under Article 6 of the Paris Agreement—a milestone that marks Bhutan’s formal entry into international carbon markets.

To further support this collaboration, the World Bank recently hosted an Investor Roundtable on the Bhutan Climate Fund. Nearly 30 stakeholders—including investors, carbon traders, and project developers—joined the session to explore investment opportunities and strategic partnerships around Bhutan’s growing carbon credit portfolio. The Bank brought together buyers, sellers, and government partners to facilitate cross-border climate innovation.

Laying the groundwork: Bhutan’s enabling environment

Bhutan is the world’s first carbon-negative country and 72 percent of the country is covered by forest, which acts as a carbon sink that can be leveraged for carbon financing. The World Bank has been supporting Bhutan to build the necessary infrastructure for effective carbon market participation. The country has finalized its Carbon Markets Policy Framework, providing a clear path for engagement. In parallel, Bhutan has developed its national carbon registry and linked it with the Climate Action Data Trust (CAD Trust) —a global platform that harmonizes carbon market data across registries.

To support implementation, Bhutan deepened its engagement through its Carbon Registry Training, aimed at strengthening technical capacity across key ministries and project developers. These efforts are complemented by ongoing discussions on innovative structures to aggregate and pool carbon credits from projects across nine sectors.

Looking ahead: Opportunities for both Bhutan and Singapore

As carbon markets in Asia continue to evolve, new opportunities are emerging for both credit-generating and credit-buying countries to engage more effectively and strategically. Several countries, including Indonesia, Vietnam, Thailand, and Japan, are making notable progress—each at different stages, but with shared ambition to align carbon markets with national climate and development goals.

Within this landscape, Bhutan stands out for its ambitious Nationally Determined Contributions and strong political commitment to climate action, and substantive efforts to establish a strong country framework for carbon markets, including significant progress in policy and registry development. Through these efforts, Bhutan is laying the foundation to access high-integrity carbon finance while advancing its vision for a carbon-neutral economy. Its experience offers a replicable example for how nations can mobilize climate finance through structured and transparent engagement.

There are lessons that can be drawn from Singapore’s development of a rules-based environment for carbon market transactions, with regulatory clarity and a growing ecosystem of digital monitoring, reporting, and verification solutions, transaction platforms, and carbon service providers. This provides a reliable ecosystem for carbon markets, which can build credibility and trust for market participants.

Together, Bhutan and Singapore represent two sides of the carbon market equation—a country with high-integrity supply and another with the infrastructure to connect that supply to global demand. Their collaboration illustrates how climate ambition, policy leadership, and financial innovation can converge to accelerate regional and global decarbonization efforts.

Source : World Bank